Following one federal court’s stay limited only to certain states (as discussed in our November 2021 E-Update), another federal court in Louisiana has now granted a nationwide preliminary injunction against the Center for Medicare and Medicaid Services’ (CMS) Interim Final Rule containing a vaccine mandate issued on November 5, 2021 (as discussed in our November 8, 2021 E-lert). This mandate requires workers of most federally-funded healthcare entities to receive their first shot by December 6, 2021 and their second by January 4, 2022. The injunction states explicitly that it “immediately enjoins and restrains the Government…from implementing the mandate.”

The federal court found that the 14 plaintiff States had a substantial likelihood of success on the merits of their challenge to the CMS rule, including:

  • CMS did not go through the notice and comment process for the Rule, and the mandate does not meet the “good cause” exception for bypassing notice and comment. The court noted that it took CMS two months to prepare the Rule, which is longer than it would have taken to simply comply with the 30-day notice and comment period.
  • CMS, an executive agency, exceeded its authority. The court found that CMS is seeking to use a general authority statute to mandate COVID-19 vaccines for over 10 million healthcare workers. The court further reasoned that the “major questions doctrine” requires that Congress speak clearly if it wishes to assign to an agency decisions of “vast economic and political significance,” and the court found this to be such an issue.
  • The court agreed that the mandate is contrary to several provisions of CMS’s delegating statute, the Social Security Act. First, CMS failed to consult with state agencies relating to conditions of participation (in Medicare/Medicaid) before issuing the Rule, a fact acknowledged by CMS when it stated it would meet with the agencies following issuance of the Rule. Second, the delegating statute prohibits the Government from supervising or controlling the “tenure or compensation of any employee or institution” – but the mandate does effectively exercise such control over employees’ tenure by requiring vaccination as a condition of continued employment. Finally, CMS did not comply with the statute’s provision to perform a regulatory impact analysis where a rule or regulation will have a significant impact on the operations of a substantial number of rural hospitals, as this mandate would.
  • The mandate is arbitrary and capricious. The court (citing a Supreme Court case argued by our managing partner, Stephen Shawe) reasoned that the Social Security Act’s purpose is to aid healthcare patients, but the mandate will have the opposite effect because healthcare institutions will lose employees, which will negatively impact patient care. Additionally, CMS “arbitrarily” rejected “obvious alternatives” such as weekly testing, masking, and social distancing, among others. The mandate’s scope is also arbitrary and capricious because it would, for example, require employees at psychiatric residential treatment facilities for individuals under 21, which is contrary to CMS’s stated interest in protecting elderly and infirm patients from COVID-19. The court likened this to “one-size-fits-all sledgehammer” phrasing of the U.S. Court of Appeals for the Fifth Circuit in its stay of OSHA’s vax-or-test Emergency Temporary Standard applicable to employers with 100+ employees(discussed in our November 13, 2021 E-lert).
  • The States have a likelihood of success on other constitutional issues, including violation of the States’ police powers, the anti-commandeering and non-delegation doctrines, and the spending clause.

The court further found that the States would suffer irreparable injury by not being able to enforce their laws that have been preempted by the CMS mandate, by incurring increased costs of training and enforcing the mandate, and by having their police power encroached upon. He added that States’ citizens will have burdens on their liberties by having to choose between vaccination or employment.

Finally, the court found that the balance of equities and the public interest favors the issuance of preliminary injunction. According to the court, the public interest is served primarily by maintaining the liberty of those who do not wish to take the vaccine, and that interest outweighs the Government’s interests.

At this time, covered healthcare entities need not comply with the CMS vaccine mandate. This ruling will undoubtedly be appealed to the Fifth Circuit (which is the same court that issued the initial stay of the OSHA vax-or-test ETS). Following that decision, the losing party will likely appeal to the U.S. Supreme Court. It is not possible to predict what these courts will do, and thus employers should not assume that the Rule will never take effect.